News from the Federal Trade Commission - October 2013

First case on debt collection by text

A debt
collector will pay $1 million to settle FTC charges that they used text messaging
to collect debts in an unlawful manner. The FTC alleged that Archie Donovan and
his companies didn’t disclose they were debt collectors; illegally revealed
debts to people’s family members, friends, and co-workers; and threatened to
sue people or garnish their wages. In addition to the $1 million civil penalty,
the settlement requires the defendants to stop sending text messages that don’t
include the disclosures required by law, and to get permission before texting
consumers.

Text spam

An affiliate
marketing company has settled the FTC’s charges that it allegedly sent more than
42.5 million deceptive text messages. According to the FTC’s complaint,
Rentbro, Inc., and its principals, Daniel Pessin and Jacob Engel, texted people
to trick them into thinking they had been selected to get $1,000 gift cards to
major retailers including Best Buy, Target, and Walmart. Recipients who tapped
a link in the message ended up at a website that required them to give up personal
information or buy items to qualify for the so-called free gift card.

Native advertising workshop

The
FTC will host a workshop on December 4 to examine the practice of
blending advertisements with news, entertainment, and other content in digital
media, referred to as “native advertising” or “sponsored content.” The FTC invites
the public to submit original research, recommendations for topics
of discussion, requests to participate as panelists, and mock-ups for
discussion. The workshop will be at 601 New Jersey Avenue, N.W., Washington,
D.C., is free, and is open to the public.

2D or not 2D

The FTC charged that a proposed
merger between rivals Honeywell International Inc. and Intermec would
reduce competition and lead to higher prices for scan engines. Scan engines are
used in two-dimensional (2D) retail bar code scanners to translate an image –
like a UPC barcode – into a digital format that a computer can read. The
companies and a third competitor, Motorola, are the only 2D scan engine makers
in the U.S. that have intellectual property portfolios broad enough to protect
against potential patent-infringement lawsuits. The proposed FTC order requires
Honeywell to license its technology, giving the buyer access to the patents it
needs to enter the U.S. market immediately and restore competition.

Business flop-portunity

At the FTC’s request, a federal court has stopped a business opportunity scheme
that allegedly conned more than $6 million from people looking to buy a
business. The FTC alleged that Money Now Funding LLC and its affiliates
falsely promised people that they could earn up to $3,000 a month by referring
merchants in their area to the defendants’ non-existent money-lending service.
The court froze the defendants’ assets and appointed a receiver to take control
of the operation, pending litigation.

"No
matter how debt collectors communicate with consumers – by mail, by phone, by
text or some other way – they have to follow the law. The FTC has a zero
tolerance policy for deception."

— Jessica
Rich Director of the FTC's Bureau of Consumer Protection

Discount these “discounts”

The FTC has moved to shut down a medical discount scheme that scammed seniors across the
country by offering phony discounts on prescription drugs. The FTC’s complaint
alleged that AFD Advisors, LLC, and its affiliates convinced people to turn
over their bank account numbers and used that information to debit money from
their accounts.